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The SEC and state regulators have brought more than 90 crypto cases over the past two years, as bitcoin and other cryptocurrencies swung from highs to recent lows. So far, the regulators have only managed to claw back about $36 million for duped investors, according to an analysis by The Wall Street Journal. One of the attractions of digital currency is its anonymity. That feature, compounded in some cases by front companies and fake owners, can also make it hard for investigators to trace funds. SEC Chairman Jay Clayton warned a year ago that his agency “may not be able to effectively pursue bad actors or recover funds” invested in digital tokens, in part because the proceeds often end up overseas. Most of the federal and state cases were designed to close the more clearly illegal digital-coin offerings, as officials fought to tame a market they said was rife with fraud, including Ponzi schemes and pump and dumps, a review by the Journal found. But regulators filed few cases at the height of crypto frenzy, when scores of new companies were offering digital coin investments and bitcoin was soaring in late 2017. The SEC produced more results in recent months as the market fell. The commission filed five cases in November, compared with four in all of 2017.

Companies will have to disclose whether executives and directors can hedge against declines in their companies’ stock, following a vote by U.S. securities regulators yesterday, the Wall Street Journal reported. The Securities and Exchange Commission completed a long-delayed post-crisis rule that is aimed at giving investors more information about whether executives are skirting company requirements that they hold stock for the long-term. Executives will now have to disclose hedging contracts that would protect their compensation from their own firms’ poor performance. “These disclosures in themselves, and in combination with our officer and director purchase and sale disclosure requirements, should bring increased clarity to share ownership and incentives that will benefit our investors, registrants, and our markets,” SEC Chairman Jay Clayton said in a statement. The rule, one of a dozen provisions in the 2010 Dodd-Frank financial law that sought to rein in executive pay after the financial crisis, has languished since it was proposed in 2015. Following Wednesday’s action, four of those rules remain uncompleted. Rules still outstanding include one that would give shareholders the ability to assess executive pay relative to a company’s financial performance.

The chairman of the U.S. Securities and Exchange Commission (SEC) said on Thursday that the regulator will consider stricter rules for submitting shareholder proposals at annual meetings, including the ownership and resubmission threshold, Reuters reported. Jay Clayton, outlining the regulator’s agenda for 2019, said that the SEC would also consider subjecting proxy advisory firms to stricter requirements for transparency and conflict-of-interest disclosure. Last month, Reuters reported that the SEC was poised to consider changes to the rules that allow company shareholders to advance special resolutions on charged issues like climate change and gun violence. Industry groups say the rules allow special interests and proxy advisory firms that recommend how investors should vote to hijack corporate boardrooms with costly demands. The move could set up the SEC for a clash with investors, who worry any rule changes would diminish their ability to hold company management accountable.

IHeartMedia Inc.’s bankruptcy-reorganization plan continues to face pushback from the U.S. Securities and Exchange Commission, the U.S. trustee and a group of longtime unsecured bondholders holding about $475 million in debt, WSJ Pro Bankruptcy reported. IHeart, which has more than 850 radio stations, filed for bankruptcy in March after nearly a year of talks with its creditors on the terms for restructuring its debt, much of which was left over from a 2008 leveraged buyout. The chapter 11 proceeding would slash about $10 billion in debt while handing over nearly all of the equity in a reorganized iHeart to a group of senior creditors led by Franklin Advisers Inc. The SEC, the U.S. trustee and the group of unsecured legacy bondholders on Wednesday all filed papers in U.S. Bankruptcy Court in Houston asking the court to not confirm the proposed reorganization plan. A confirmation hearing is scheduled for Dec. 11.

Supreme Court justices today will effectively be asked to rule on the jurisprudence of their newest colleague in a fraud case that tests how far the Securities and Exchange Commission can go in holding stockbrokers accountable for disseminating false statements to clients, the Wall Street Journal reported. The court’s newest member, Justice Brett Kavanaugh, considered the case last year as an appeals court judge and wrote a spirited dissent in support of a broker whom the SEC sanctioned after finding he willfully sent misleading emails that solicited investments in a startup energy company. The commission said that broker Francis Lorenzo was aware the company’s technology, which claimed to generate electricity by converting solid waste to gas, didn’t work and was worth little, if anything, yet sent the solicitations to potential investors anyway. The SEC hit the broker with a $15,000 civil penalty and barred him for life from the securities industry. Lorenzo contested the charges, saying that his boss wrote the text of the emails and that he didn’t think about their contents before he sent them. The broker said that the emails stated explicitly that he was sending them at his boss’s request. Read more. (Subscription required.) 

Don't miss bankruptcy scholars Profs. Ronald J. Mann of Columbia Law School, Margaret Howard of Washington and Lee University School of Law and Ralph Brubaker of University of Illinois College of Law to take part in a discussion at a Winter Leadership Conference session on Friday titled "Historical Perspectives: Bankruptcy and the U.S. Supreme Court." The presentation will not only focus on the most important bankruptcy decisions by the Supreme Court but also on the decision-making process that the Justices undertake to reach their conclusions. Register here.

A California auto dealer abruptly closed most of its locations this past week without explanation, leaving employees unable to cash their paychecks amid rumors of a possible sale. But records filed in an ongoing fraud case brought by the Securities and Exchange Commission offer some insight as to the possible root cause: the dealership’s owner has been struggling to grapple with an immense load of debt, Jalopnik reported. A report from the Daily Republic in Solano County, California, first broke word of the closures on Friday, confirming six of the seven dealerships owned by Momentum Auto Group had closed up shop. A day later, a local ABC affiliate reported a seventh dealership had closed, with some locations posting signs that read “closed until further notice,” while others said “out of business.” It wasn’t immediately known how many workers might be out of a job at this point, nor if the closures are even permanent. Records indicate that Momentum employed about 300 workers in the area. But what’s clear from records in a separate, ongoing SEC case is that Momentum’s owner, Rahim Hassanally, has spent months trying to address an enormous debt load associated with the dealer group. And while records indicate a sale was in the works, he now finds himself caught up in the fallout of the SEC’s investigation.

Securities regulators are investigating a company’s $50 million cryptocurrency sale, an executive with the firm said, and people familiar with the probe said that it includes looking at whether a prominent bitcoin entrepreneur broke the law by getting involved with the company’s fundraising, the Wall Street Journal reported. The entrepreneur, Erik Voorhees, is chief executive of ShapeShift AG, a digital-asset exchange that suspected criminals have used to launder millions of dollars in allegedly ill-gotten gains, the Wall Street Journal reported earlier this year. Law-enforcement officials in the U.S. and abroad have looked at ShapeShift’s role in processing assets in several criminal cases. Now, the Securities and Exchange Commission is probing another company that has been affiliated with Voorhees, Salt Lending Holdings Inc. The company, which loans money to people using their cryptocurrency as collateral, received a subpoena from the SEC in February seeking records related to a $50 million digital-token sale it held last year. Read more. (Subscription required.) 

Don't miss the "Cryptocurrency, Blockchain and Other Breaking News" session at ABI's Winter Leadership Conference in December. This panel will discuss the impact of cryptocurrencies on the financial industry and how to litigate the complex issues they bring. Click here to register.

The U.S. Securities and Exchange Commission is sharpening its focus on corporate disclosures about the risks associated with the U.K.’s exit from the European Union, Chairman Jay Clayton said yesterday, the Wall Street Journal reported. “My personal view is that the potential impact of Brexit has been understated,” Clayton said. “I would expect companies to be looking at this closely and sharing their views with the investment community.” The U.K. has continued to negotiate with Brussels over the terms of its divorce from the EU, currently scheduled for March 29, but an agreement remains elusive. Britons voted to leave the EU in 2016. Companies in recent months have moved to prepare for Brexit by stocking up on raw materials, parts and medicines, and planning factory shutdowns, among other strategies. Firms also are reviewing their financial arrangements to determine whether they will need to relocate syndicated loans and various derivatives currently booked through London to Europe.

The Securities and Exchange Commission said yesterday that it reached a settlement with the founder of a digital-token trading platform for operating an unregistered exchange, the Wall Street Journal reported. The regulator reached a settlement with EtherDelta founder Zachary Coburn, who in 2016 launched the EtherDelta website as a platform for trading blockchain-based tokens— known as ERC20 tokens — the SEC said. ERC20 is a standard coding protocol often used in initial coin offerings. This is the first time the SEC has targeted a cryptocurrency exchange, and what is known in the crypto sector as a “decentralized” exchange. Essentially, EtherDelta was a piece of software that allowed users to trade with each other directly, as opposed to a centralized business like a traditional stock market that facilitates trading. Coburn, without admitting or denying the SEC’s accusations, will pay $300,000 in disgorgement, a $75,000 penalty and $13,000 in prejudgment interest, the SEC said. The regulator said it took Coburn’s cooperation into consideration when deciding on his penalty. Read more. (Subscription required.) 

Don't miss the "Cryptocurrency, Blockchain and Other Breaking News" session at ABI's Winter Leadership Conference in December. This panel will discuss the impact of cryptocurrencies on the financial industry and how to litigate the complex issues they bring. Click here to register.